India has potential for 10 percent growth: UN agency

New Delhi, March 27 (IANS) India has entered a new phase of high growth with a forecast for nine percent expansion for the current fiscal, thanks to higher savings and investment, a UN agency said in a report Thursday. “India could achieve and sustain a 10 percent growth rate by further improving the country’s business environment, by developing its physical infrastructure and human capital,” said the United Nations Economic and Social Commission for Asia and the Pacific (Escap).

“The main drivers of the growth lay in the industrial and services sectors that compensated for a slowdown in agriculture,” the agency said in its “Economic and Social Survey for Asia and the Pacific” released here.

The survey said while inflationary trend eased from 6.7 percent in 2006 to 5.5 percent in 2007, there were enough warnings that pressures on the price line can emerge as international commodity prices, especially for oil and food, remain high.

“Should oil and food prices remain high, they will compromise economic growth, while putting pressures on budgets, inflation rates and balance of payments in countries through the sub-region,” Escap said.

On the positive side, the agency said India’s fiscal deficit, which dropped to 3.1 percent from 3.7 percent in 2006, reflected the government’s efforts to improve revenues and efficiencies in allocation towards public spending.

“Resetting of expenditure has led to higher growth outlays for social sectors.”

Escap said revitalisation of agriculture was the key to reducing poverty as it still provides employment to 60 percent of the working population and called for renewed attention to this neglected area.

“India, China, Bangladesh and Indonesia would gain the most,” it added.